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Cape Town – Finance Minister Pravin Gordhan didn’t shy away from answering tough questions from the floor when he addressed delegates at the 10th national congress of the National Union of Metalworkers SA (Numsa) in Cape Town.
Numsa general secretary Irvin Jim on Monday hailed Gordhan as one of the only members of government who were courageous enough to face questions from the audience.
One of the questions from the floor was why government didn’t do more to curb corruption in South Africa, as there seemed to be no consequences for such behaviour.
Gordhan said South Africans need to understand there are things that National Treasury can do and there are things government can do, but that society should also step in.
“Sometimes when you’re feeling ill you can go to the chemist, but sometimes when you are seriously ill you require serious attention,” Gordhan said, adding that “society as a total force” should speak out on corruption.
“[We must] make it absolutely clear what are the values that we as a society stand for,” Gordhan said.
Gordhan said society should also ask what are the things that public money should be spent on and not be spent on.
“And more importantly, where are the enforcement institutions that are supposed to be charging the right people for doing the wrong things?
“I won’t tell you about what else they do,” Gordhan quipped, referring to the recent charges that had been brought against him by the National Prosecuting Authority before being dropped a few weeks later.
Free higher education
Gordhan was also asked how government intends on providing free higher to South African students.
Gordhan responded, saying that there are a number of forums that deal with the question of state-assisted higher education.
“All of those (institutions) are making a contribution and I can say that in the new year those that require the assistance of the state will get the assistance of the state.”
Gordhan said in his February budget this year, National Treasury had to find R16bn “literally overnight” to make provision for the zero-fee increases that had been announced by President Jacob Zuma late in 2015.
“But how do you get R16bn without blowing the bank?” Gordhan said.
“The way you get it is you go to different departments and you cut certain amounts. But you can’t keep cutting. You need to find new resources. So (in addition to) that R16bn over three years we added another R17bn over three years.”
He said National Treasury will continue to look for resources over the next three to five years as the new needs arise and as it becomes clearer what is the framework that will take South Africa forward as a society so as to ensure that “every single poor child or child of a family that’s in the so-called ‘missing middle’ is funded to the extent that is necessary in order for them to get the right level of education”.
Ratings agencies
Gordhan was also quizzed about government paying too much attention to the opinion of ratings agencies.
Gordhan conceded that the big ratings agencies have some explaining to do, as they didn’t pay enough attention to ill-governed institutions before the 2008 financial crisis.
“They need to explain why they give AAA ratings to these fake products around 2006, 2007 and 2008 that actually created the problems – the financial crisis that we had suffered since then.”
He stressed though that as long as South Africa needs to borrow money (of which 10% comes from foreigners who have invested in South African debt) these investors need the assurance of ratings agencies that they can, in fact, lend money to South Africa.
“It works the same way with banks – they would grant a loan to person X, but not to person Y. And if you like, that’s a rating that you get from your banking environment as well,” Gordhan explained.
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